Wednesday, December 7, 2011

Markets slide as European debt talks continue

 Stocks have been in the red on nervousness about the goings on in Europe.  Dow dropped 40, decliners ahead of advancers 3-1 &  NAZ fell 25.  The Financial Index was off 1.64 to 175.

The MLP index is down a fraction while the REIT index fell 2 to 220.  Junk bond funds were mixed but Treasuires rose.  Oil extended losses after the Energy Dept reported an unexpected increase in inventories.  Gold rose for the first time in 3 days as the ECB was said to be planning to announce measures to bolster lending, reviving demand for gold as an inflation hedge.

AMZ   Alerian MLP Index

DJR   Dow Jones Equity REIT Index

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLF12.NYM...Crude Oil Jan 12...101.02 ....Down 0.26  (0.2%)

GCZ11.CMX...Gold Dec 11......1,735.10 ...Up 7.20  (0.4%)

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ECB Said to Consider Extra Measures to Stimulate Lending

Photo:    Bloomberg

The ECB may announce a range of measures tomorrow to stimulate bank lending. Options include loosening collateral criteria so that institutions have more access to cheap ECB cash & offering longer-term loans to stimulate the flow of credit.  An interest rate cut is likely, with only the size of the reduction to be determined.  The ECB is focusing on getting banks lending again rather than increasing its gov bond purchases to fight Europe’s debt crisis.  Chancellor Merkel & French President Sarkozy have sent a letter outlining their proposals to save the €, including punishing countries that spend too much money, saying govs that allow their deficits to exceed 3% of GDP should be automatically sanctioned & asked to lay out a plan for reducing spending.  It also says that countries that continue to violate spending rules will face a series of increasingly strict sanctions. Tough measures may not be welcome by all countries.

ECB Officials Said to Plan Additional Measures to Stimulate Bank Lending

Citigroup Plans to Cut 4,500 Jobs, Take $400 Million Charge

Photo:   Bloomberg

Citigroup plans to eliminate 4500 jobs in the coming months as it looks to further cut its costs.  As a result, the company will take a $400M charge in Q4 to cover severance & other expenses.  CEO Vikram Pandit said  “Financial services faces an extremely challenging operating environment with an unprecedented combination of market uncertainty, sustained economic weakness in the developed economies and the most substantial regulatory changes we have seen in our lifetimes.”  He added, “These trends will likely significantly affect the competitive landscape in the coming years.”  The banking business is not recovering as it should during the economic recovery.  The stock dropped 88¢ in what has been a dismal year.

Citigroup to Cut 4,500 Jobs on Slumping Revenue

C   Citigroup

  • <p>               CORRECTS SPELLING OF PHOTOGRAPHER'S NAME IN SIGNOFF - An Indian vendor shows vegetables to a customer at an outdoor vegetable market in New Delhi, India, Wednesday, Dec. 7, 2011. India on Wednesday suspended its plan to open its huge retail sector to foreign companies such as Wal-Mart in a reversal seen as a major capitulation to political opponents that further weakens the administration.(AP Photo/Kevin Frayer)
Photo:   Yahoo

India suspended its plan to open its huge retail sector to foreign companies such as Wal-Mart, a Dow stock & Dividend Aristocrat, in a reversal seen as a major capitulation to political opponents that further weakens the administration.  The business community had hailed the decision to let foreign firms own a majority stake in retailers here just 2 weeks ago, & the gov & some economists said foreign retailers would bring better prices for farmers & lower prices for consumers.  But opposition parties & some members of the governing coalition protested, saying local mom-and-pop stores that are the heart of retailing would be crushed.  The gov said the foreign retail plan was "suspended until a consensus is developed through consultations with various stakeholders."  It was not clear how long that process would take or whether the policy would be implemented or canceled as a result. Who said doing business overseas was easy?  WMT rose 69¢.

India Halts Wal-Mart Entry Amid Protests

WMT  Wal-Mart Stores

Markets are anxious, not knowing what to expect from European debt talks.  There is an abundance of brave words but actions will be what counts.  Investors will remain jittery until they hear official word by week's end. Dow had a nice rally last week, but could not overcome the interim high of 12.2K.  That ceiling should hold until Fri, maybe even longer.

Dow Jones Industrial Average

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